Texas Pacific withdraw offer on Smurfit

TEXAS Pacific Group, the American venture capital firm headed by Ryanair chairman David Bonderman, have pulled out of an offer for Jefferson Smurfit.

Texas Pacific had been carrying out due diligence on Smurfit, but have decided not to make a rival bid to that of the Madison Dearborn’s 3.26 per share offer.

The move means that it is highly unlikely that any other rival offer will come through, leaving the way clear for Madison and the Smurfit family to take control.

Smurfit would not confirm the name of the party, but it is understood to be Texas Pacific, which in the past has backed companies like Ducati.

“The Independent Directors of JSG have previously announced that, in addition to the offer for JSG from MDCP Acquisitions, they had received an approach from an unaffiliated financial party. That party has, over the last month, been provided with relevant information and access to management pursuant to the Irish Takeover Rules. The party has now informed JSG and its advisers that it does not intend to make a competing offer for JSG,” the independent directors of Smurfit said yesterday in a statement.

“The Independent Directors confirm that no other approaches have been received and they have not been asked to provide any information to any other party interested in making an offer for JSG,” it added.

Madison’s offer had originally valued Smurfit at 3.7 billion euro, but because of falling stock market values and the upswing in the euro, it now worth 3.5 billion euro in a mixture of cash and shares.

The offer by Madison Dearborn, which has been recommended by the independent directors, remained open until August 6. The news will be a blow for shareholders who feel that they are losing on the offer as analysts had expected Smurfit to fetch up to 3.50 per share.

While the small shareholders may be annoyed at the situation it would have been difficult for Texas Pacific to make an offer without the support of the Smurfit family. With 10% of the shares in their hands, any rival bidder would have to make a considerable increase on the 3.26 offer to unseat them from the Madison Dearborn offer.

They will gain around 350 million euro from the sale of their stake and reinvest a portion of. However, the company’s chief executive Michael Smurfit will still net around 250 million euro for himself and be entitled to a 16 million salary as non executive chairman of Smurfit over the next six years.

Madison Dearborn have also agreed to a clause in his contract whereby he will receive a full year’s salary package if he leaves the company.